Gold prices soared to a one-month high on Thursday as U.S. Treasury yields slipped, fuelled by softer-than-expected economic data. Investors, increasingly leaning towards caution from the Federal Reserve, are turning to gold as a safe haven.
Spot gold climbed nearly 0.8% to $2,716.91 an ounce, and U.S. gold futures rose 1.2% to settle at $2,750.90. The rally comes on the heels of recent signs of slowing inflation, which have sparked hope that the Fed might ease up on rate hikes sometime in 2025.
A key piece of data—the latest U.S. jobless claims report—showed a surprise increase to 217,000, above the anticipated 210,000. This uptick suggests the labour market might be losing some steam. “The rise in jobless claims hints at softening in the labour market,” said Alex Ebkarian, COO at Allegiance Gold. “Along with lower Treasury yields, it’s creating the perfect conditions for gold to shine.”
10-year Treasury yields dropped to a week-low, making gold more attractive compared to interest-bearing investments. As yields decline, the metal often gains appeal as a non-yielding asset with a safe-haven reputation.
Adding to the optimistic sentiment for gold, December’s core inflation came in at just 0.2%—a slowdown from the 0.3% seen in previous months. This slower pace has led traders to adjust their views on Fed policy. Many now expect about 37 basis points of rate cuts by the end of 2025, up from the previous forecast of 31 basis points before the inflation report came out.
Geopolitical tensions are also contributing to gold’s rise. In the Middle East, a deadly airstrike in Gaza that killed 77 people just hours after a ceasefire was announced underscores the region's volatility. Such events often drive investors toward gold as a hedge against uncertainty. “Gold tends to perform well when people seek safety,” observed one market analyst. “While economic worries are one driver, geopolitical flare-ups can push demand even higher.”
This recent surge highlights gold’s enduring role as a reliable haven during turbulent times. Its future will likely hinge on how both economic indicators and global events evolve. If inflation stays low and the Fed adopts a more dovish stance, gold might continue to hold strong.
For now, gold seems to be benefiting from a mix of cautious economic sentiment and ongoing global uncertainty. Whether it can reclaim its highs from October remains an open question, but one thing is clear: the metal is firmly back in the spotlight.
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